Kennametal Inc (KMT) Reports Fiscal Q2 2024 Earnings, Announces New $200 Million Share Repurchase Program

Earnings Per Share Rise to $0.29; Strong Cash Generation and Dividend Declaration

  • Earnings Per Share (EPS): Increased to $0.29 from $0.27 in the prior year quarter.
  • Cash from Operations: Strong year-to-date cash from operations at $88 million, the highest since fiscal 2016.
  • Shareholder Returns: Returned approximately $31 million to shareholders through repurchases and dividends.
  • Share Repurchase Program: Announced an additional share repurchase program of up to $200 million over three years.
  • Sales Performance: Sales remained flat at $495 million, with a slight organic sales decline offset by favorable business days and currency exchange effects.
  • Restructuring Savings: Achieved approximately $5 million in restructuring savings, with an increased savings target of $35 million by the end of FY24.
  • Dividend: Declared a quarterly cash dividend of $0.20 per share, payable on February 27, 2024.
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On February 7, 2024, Kennametal Inc (KMT, Financial) released its 8-K filing, detailing the financial outcomes for the second quarter of fiscal year 2024, which ended on December 31, 2023. Kennametal, a leading manufacturer of metalworking tools and wear-resistant engineered components, operates primarily through its Metal Cutting and Infrastructure segments, with the former being the most significant revenue contributor. The company's performance is a key indicator of the industrial products industry's health, particularly in the metalworking sector.

Kennametal reported a slight increase in EPS to $0.29, up from $0.27 in the prior year quarter, despite sales being at the lower end of the company's outlook due to softening market conditions. The company's strong cash generation, with year-to-date cash from operations reaching $88 million, reflects effective working capital management and operational efficiency. This performance is particularly noteworthy as it represents the highest first-half cash generated from operations since fiscal 2016.


President and CEO Christopher Rossi highlighted the company's resilience amidst challenging macro-economic conditions, including a softening across end markets and no recovery in China this fiscal year. Rossi emphasized Kennametal's focus on share gains and cost reductions, with the company taking additional steps to increase restructuring savings from $20 million to $35 million by the end of FY24. These measures, along with the extended share repurchase program, are aimed at driving long-term value for shareholders.

Once again this quarter we generated strong cash from operations, even though sales were at the lower end of our outlook due to softening market conditions, most notably in December,” said Christopher Rossi, President and CEO.

The company's financial achievements, including the announced share repurchase program, underscore its commitment to returning value to shareholders. The repurchase program, which aims to buy back up to $200 million of Kennametal common stock over three years, is expected to be funded through cash generated from operations.

Despite flat sales, Kennametal's operational initiatives have led to a stable financial position. The company's balance sheet remains robust, with net cash flow from operating activities and free operating cash flow showing significant improvements from the prior year. The company's disciplined capital allocation, including the payment of $16 million in cash dividends and the repurchase of 625 thousand shares for $15 million, reflects its strong cash flow generation capabilities.

Looking ahead, Kennametal has updated its full-year outlook to reflect current market conditions, with sales now expected to be between $2.020 and $2.070 billion and adjusted EPS between $1.35 and $1.65. The company anticipates pricing actions to cover raw material costs, wages, and general inflation, and aims to maintain free operating cash flow at 100 percent of adjusted net income.

In summary, Kennametal's fiscal 2024 second quarter results demonstrate the company's ability to navigate a challenging economic landscape while continuing to prioritize shareholder value and operational excellence. The additional share repurchase program and the company's focus on cost reductions are strategic moves that position Kennametal for long-term success.

Explore the complete 8-K earnings release (here) from Kennametal Inc for further details.